The real average and overall salary paid in South Africa contracted in January 2021 after coming under strain from the pandemic and level 3 lockdown, the latest BankservAfrica Take-home Pay Index (BTPI) shows.
“The real average salary was R13,030, which represents a 2.4% decline from December 2020 and a -0.2% year-on-year decrease,” said Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements.
“This is a sure sign of the pressure that average salaries faced under this period.”
This, however, reflects a return to the usual movements as average salaries in the BTPI typically decline before making a slight comeback in real terms.
It could also have to do with the high average salary base from the previous year, Naidoo said.
“As South Africa and the world begins to emerge from the lockdown and pandemic, and vaccinations slowly come to the rescue, one can expect a return of negative months before things hopefully improve,” said Mike Schüssler, chief economist at economists.co.za.
Inflation also played a role in the BTPI. In January 2021, the total take-home pay paid into the combined bank accounts of employees was up by just 0.6% before inflation. However, when taking inflation over the past year into consideration, this declined by 2.5%.
“The economic bounce back has been impressive and most formal sector employees paid via the National Payment System have managed to keep their jobs or were re-employed,” said Schüssler.
However, one should not get optimistic too soon as the total number of banked take-home pay remains lower than a year ago and before the pandemic.
“A number of people are still not back at work, which we believe to be the reason for the 3.2% decline in the monthly equivalent paid between January 2020 and 2021,” said Schüssler.
According to the BTPI, the average salary figures are beginning to normalise, as has been expected a few months back. This return to normal for salaries should continue with a few affected industries expected to experience some shocks in the coming months.
The overall take-home numbers suggest January will be a weak consumer spending month when compared to a year ago.
However, the reinstatement of the COVID-TERS payments until the end of March for industries affected by the lockdown may provide some relief in the short term.
But, with the average real take-home pay declining, it will be interesting to see if there will be tax relief for employed South Africans when the National Budget Speech is tabled tomorrow.
This is as businesses and households come under even more financial pressure from the planned 16% hike in electricity costs in April.